Healthcare Reform and Innovation

Over the past several weeks I have attended and participated in several seminars on the Patient Protection and Affordable Care Act (PPACA), or more commonly referred to as the Healthcare Reform Act.  Presentations have included discussions on the tax implications, Justice Department enforcement, and the Insurance industry impact.  There have also been several expert panels comprised of executives from providers and insurers discussing the impact on their organizations and for some, their personal views on the subject.

One of the themes I have observed from these panelists has been, with a few exceptions, a prevailing attitude of, “How am I going to fit the new requirements of the Healthcare Reform Act into my existing system?”  I’m not so sure this is the right question to ask.

Clayton Christensen coined the term Disruptive Innovation, which “describes a process by which a product or service takes root initially in simple applications in the bottom of a market then relentlessly moves ‘up market’ eventually disrupting established competitors.”  He uses several examples of this concept applied to Healthcare in his book The Innovator’s Prescription.   While not Disruptive Innovation, the Healthcare Reform Act presents to us, in essence, Disruptive Regulation.

The regulation does not direct Healthcare organizations (providers, insurers, etc.) how to change their business practices, the way they are organized, or their business models.  It does, however, lay out new means of reimbursement, coverage requirements, and tax implications, which will become very disruptive to organizations that continue to operate the way they always have.

To meet the needs of this new “Disruptive Regulation” will require all involved in healthcare to become very innovative in their approach to delivering and providing care for patients.  What these innovations are and what they look like remains to be determined.  Ideas like Accountable Care Organizations (ACOs) as mentioned in the Healthcare Reform Act represent a model of healthcare service and reimbursement focused on providing a continuum of care for the patient.  Again, while no one is sure what these ACOs will look like, especially since, according to one attorney who spoke at a recent seminar, the ACO model as outlined “breaks at least five existing federal laws,” what is sure is that a new line of thinking will be required to deliver healthcare efficiently and effectively.

So, instead of taking the “woe is me” attitude and trying to figure out how to fit the new regulations into existing systems, a more appropriate question to ask might be, “how am I going to change my business model and processes to meet the new requirements?”  Organizations that seize this as an opportunity to develop innovative new processes, organizational structures, and business models stand to benefit a great deal.

Let me know your thoughts!

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